The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded TransDigm Group Incorporated (NYSE:TDG) and determine whether the smart money was really smart about this stock.
Is TransDigm Group Incorporated (NYSE:TDG) a healthy stock for your portfolio? Prominent investors were betting on the stock. The number of long hedge fund bets increased by 6 recently. TransDigm Group Incorporated (NYSE:TDG) was in 63 hedge funds’ portfolios at the end of September. The all time high for this statistic is 64. Our calculations also showed that TDG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s take a look at the latest hedge fund action encompassing TransDigm Group Incorporated (NYSE:TDG).
Do Hedge Funds Think TDG Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 63 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the second quarter of 2021. By comparison, 64 hedge funds held shares or bullish call options in TDG a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Tiger Global Management LLC, managed by Chase Coleman, holds the biggest position in TransDigm Group Incorporated (NYSE:TDG). Tiger Global Management LLC has a $1.0975 billion position in the stock, comprising 2.1% of its 13F portfolio. Coming in second is Stockbridge Partners, managed by Sharlyn C. Heslam, which holds a $970.9 million position; the fund has 20% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism consist of Mark Massey’s AltaRock Partners, David Goel and Paul Ferri’s Matrix Capital Management and Lone Pine Capital. In terms of the portfolio weights assigned to each position AltaRock Partners allocated the biggest weight to TransDigm Group Incorporated (NYSE:TDG), around 22.34% of its 13F portfolio. Anabranch Capital is also relatively very bullish on the stock, setting aside 20.94 percent of its 13F equity portfolio to TDG.
As one would reasonably expect, key money managers have been driving this bullishness. Junto Capital Management, managed by James Parsons, initiated the largest position in TransDigm Group Incorporated (NYSE:TDG). Junto Capital Management had $63.4 million invested in the company at the end of the quarter. Kevin D. Eng’s Columbus Hill Capital Management also made a $10.5 million investment in the stock during the quarter. The other funds with brand new TDG positions are Carl Tiedemann and Michael Tiedemann’s TIG Advisors, Paul Tudor Jones’s Tudor Investment Corp, and Michael Gelband’s ExodusPoint Capital.
Let’s go over hedge fund activity in other stocks similar to TransDigm Group Incorporated (NYSE:TDG). These stocks are Rockwell Automation Inc. (NYSE:ROK), First Republic Bank (NYSE:FRC), International Flavors & Fragrances Inc (NYSE:IFF), CoStar Group Inc (NASDAQ:CSGP), PPG Industries, Inc. (NYSE:PPG), BeiGene, Ltd. (NASDAQ:BGNE), and Xcel Energy Inc (NYSE:XEL). All of these stocks’ market caps match TDG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ROK | 29 | 519693 | 4 |
| FRC | 35 | 918312 | 1 |
| IFF | 46 | 2838241 | -6 |
| CSGP | 29 | 2585035 | -20 |
| PPG | 30 | 318414 | 4 |
| BGNE | 16 | 6418381 | -5 |
| XEL | 26 | 498007 | 4 |
| Average | 30.1 | 2013726 | -2.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.1 hedge funds with bullish positions and the average amount invested in these stocks was $2014 million. That figure was $7189 million in TDG’s case. International Flavors & Fragrances Inc (NYSE:IFF) is the most popular stock in this table. On the other hand BeiGene, Ltd. (NASDAQ:BGNE) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks TransDigm Group Incorporated (NYSE:TDG) is more popular among hedge funds. Our overall hedge fund sentiment score for TDG is 89.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, TDG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TDG were disappointed as the stock returned -1.3% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
Follow Transdigm Group Inc (NYSE:TDG)
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Disclosure: None. This article was originally published at Insider Monkey.
